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January 2010, Volume 16, Number 1

Agriculture: US, Europe

Monsanto. Monsanto introduced the herbicide glyphosate (Roundup) in the 1970s; it kills just about all weeds, and breaks down quickly in the sun and rain. However, until Roundup Ready seeds were developed, Roundup had to be sprayed before planting. Monsanto found the gene, CPS4, that made plants tolerate Roundup, and inserted it into soybeans and corn. In 2009, about 93 percent of US soybeans and 80 percent of US corn was planted with Roundup Ready seeds, which costs about $1 a pound for soybeans.

Dupont is suing Monsanto, alleging that Roundup Ready seeds are preventing competitors from marketing their innovations. Monsanto counters that it licenses Roundup Ready technology to its competitors.

Biofuels. In 2007, when US refineries used seven billion gallons of ethanol and other biofuels, Congress mandated that they use 15 billion gallons in 2012. Refineries are unlikely use 15 billion gallons because gasoline at the pump can contain a maximum 10 percent ethanol, and demand for gasoline is falling from the peak 3.4 billion barrels in 2007 to 3.3 billion in 2008.

Shrimp. The US produced about 90 million pounds of shrimp in 2008, mostly in Louisiana; imports were 1.6 billion pounds. The price of US shrimp has fallen from $6 a pound to $1.50 a pound, and shrimpers blame both imports and US shrimp processors.

Some shrimpers allege that US processors re-label imports as domestic and use sodium tripolyphosphate (tripoly) on US shrimp so they absorb water, making them appear larger and thus more expensive. Some US restaurants refuse to buy Louisiana shrimp, alleging that its weight has been raised with tripoly.

Minority Farmers. The US Department of Agriculture makes loans to farmers who cannot secure private sector loans. Black farmers sued USDA, alleging discrimination against them in the local offices where farmers apply and applications are approved? about 15,000 Black farmers received $1 billion to settle the class-action Pigford suit.

In November 2009, USDA began negotiations with Native American farmers in the Keepseagle class-action suit, which similarly alleges systematic discrimination. Hispanic and female farmers have filed similar lawsuits.

US Forest Service. The Forest Service has regular, seasonal and temporary employees. Seasonal employees are hired for at least six months or 1,040 hours a year (52 weeks at 40 hours a week is 2,080 hours a year). Many temporary employees are recalled year after year and given 1,039 hours of work, which makes them ineligible for health and pension benefits; some Forest Service temps collect unemployment insurance after they are laid off.

Europe. The EU spends E55 billion ($80 billion) a year on its Common Agricultural Policy. The CAP absorbs 43 percent of the EU's 2009 budget of E136 billion, and is equivalent to E110 a year for each of the 500 million residents of the EU's 27 member states. In 2009, E41 billion of CAP spending was direct aid to farmers and E14 billion went for rural development. [The EU spent another E55 billion on policies to promote employment and economic growth].

The CAP provides aid to farmers in many ways, from establishing minimum prices for the commodities they produce to offering rebates on surplus commodities that are exported. French farmers received E10 billion in CAP payments in 2008, and France wants to maintain EU CAP spending at high levels to protect small farmers. However, CAP payments are concentrated-- 20 percent of beneficiaries receive 80 percent of the payments.

The New York Times on October 27, 2009 reported on export subsidies for sugar, a crop that covers 2.5 million acres and produced about 17 million metric tons of sugar in 2009. European sugar is produced from beets at a relatively high cost. Some European sugar firms buy cane sugar on the world market at prices that are half the European price, mix it with European beet sugar, and send it to a European non-EU member such as Croatia or Russia to claim the export subsidy.

The US sugar subsidy system, which involves primarily restrictions on imports to keep sugar prices high, is less distorting than the European sugar subsidy system, which also restricts imports to keep European sugar prices about 20 percent higher than US sugar prices.

There are similar problems involving other farm subsidies. The Vamos, Crete farmers cooperative claimed five times more olive oil than the trees could produce, typically one to five liters per tree. The EU aims to combat fraud linked to production of specific commodities by replacing the current system with direct payments to farmers based on their historical production.


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